Tina R. Thomas, O.D. v. Pearle Vision, Inc.

Citations: 251 F.3d 1132; 6 Wage & Hour Cas.2d (BNA) 1807; 26 Employee Benefits Cas. (BNA) 1214; 2001 U.S. App. LEXIS 11063; 80 Empl. Prac. Dec. (CCH) 40,555; 2001 WL 576478Docket: 00-3681

Court: Court of Appeals for the Seventh Circuit; May 30, 2001; Federal Appellate Court

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Dr. Tina Thomas filed a lawsuit against Pearle Vision, Inc. after the company denied her restoration to her optometrist position following maternity leave. She alleged a breach of her employment contract, arguing that Pearle's 1997 Summary Plan Description (SPD) for employee benefits incorporated the Family Medical Leave Act (FMLA). Thomas contended that Pearle violated the FMLA by failing to notify her of her status as a highly compensated employee, which would affect her job restoration eligibility after her leave. The district court ruled in favor of Pearle, granting summary judgment based on the "Problem Resolution" clause in the SPD, which the court determined provided an exclusive remedy for FMLA compliance issues. Consequently, Thomas's non-compliance with this clause was deemed a barrier to her claims. 

Dr. Thomas began her employment with Pearle in September 1994 and was informed of her FMLA eligibility in the 1997 SPD, which required one year of service and 1,250 hours worked within the prior 12 months for leave eligibility. The SPD outlined the leave request process, including notifying a supervisor 30 days in advance and completing FMLA forms. In February 1997, Thomas requested maternity leave and completed the required paperwork, indicating she sought eight weeks of leave, despite being entitled to twelve weeks under the FMLA and Pearle’s policy. She confirmed her capability to perform her job functions on the physician certification form completed before her child's birth.

Dr. Thomas raised concerns about her job restoration eligibility to Pearle's regional manager, Cheryl Melquist, after completing leave forms. The 1997 Summary Plan Description (SPD) indicated that highly compensated salaried employees could take leave but were not guaranteed restoration to their positions. Melquist reassured Thomas that Pearle would assist in finding substitute doctors during her leave. However, both Melquist and human resources manager Tim Hying mentioned that there might not be a position available upon her return, which contradicted Melquist's earlier assurances. They failed to provide written notice regarding her job restoration status.

Prior to Thomas's leave starting on April 29, 1997, Pearle hired several part-time doctors, including Dr. Don Nelson, to cover her absence. Thomas sent a letter to Melquist inquiring about her position and Dr. Nelson's status. Melquist confirmed Nelson was temporary help, but shortly after, Hying directed Melquist to hire Nelson as a full-time doctor without notifying Thomas of this decision or that temporary help would no longer be utilized.

Dr. Thomas discovered in July 1997 that Pearle had hired a full-time replacement for her when she noticed her name was removed from her office door. Regional manager Kurt Schaefer left a message on her voicemail informing her of Nelson's full-time hire and the unavailability of positions without explaining the economic implications of restoring her position. Subsequently, Dr. Thomas filed a lawsuit against Pearle for breach of contract, claiming that the FMLA provisions were incorporated into her contract via the SPD, and that Pearle failed to provide the required written notice regarding job restoration upon her leave request.

Pearle sought summary judgment, asserting that the 1997 Summary Plan Document (SPD) did not form an enforceable contract granting Dr. Thomas rights under the Family and Medical Leave Act (FMLA) and that Dr. Thomas breached the contract by not utilizing the "Problem Resolution" clause. The trial court ruled against Pearle's first argument, determining that the 1997 SPD satisfied the requirements of Duldulao v. Saint Mary of Nazareth Hospital and constituted an enforceable contract providing Dr. Thomas FMLA benefits. However, the court granted summary judgment to Pearle based on Dr. Thomas's failure to follow the "Problem Resolution" procedure, which it deemed a breach of contract.

Dr. Thomas then moved to reconsider and supplement the record to demonstrate compliance with the clause, alleging that Pearle had breached the contract first. The court vacated its prior judgment but later reinstated summary judgment for Pearle, arguing that the "Problem Resolution" clause limited Dr. Thomas's rights under the SPD and served as the exclusive remedy for any violations of her FMLA benefits.

Dr. Thomas appealed on two issues: whether the 1997 SPD constituted an enforceable contract granting her FMLA benefits and whether the "Problem Resolution" clause was ambiguous. The appellate court reviews summary judgment de novo, confirming that a genuine issue of material fact exists in contract disputes when key provisions are ambiguous. It noted that Dr. Thomas was not eligible for FMLA benefits due to Pearle's employee count but contended that the SPD created enforceable contract rights. Under Illinois law, employee manuals can establish enforceable contracts if the standard contract formation elements are present.

Dr. Thomas asserts that Pearle made an express promise to grant her Family and Medical Leave Act (FMLA) benefits based on a passage from the 1997 Summary Plan Description (SPD), which states that employees who have worked for Pearle for at least one year and 1,250 hours in the previous 12 months are eligible for FMLA leave. She argues that this language waives the minimum employee requirement for FMLA eligibility and incorporates the FMLA fully into her contract. Pearle contests this interpretation, claiming the SPD does not create an enforceable contract as it does not explicitly promise the full range of FMLA rights. However, the language indicating eligibility for all employees with the requisite tenure and hours is viewed as an express promise. 

Further support for Dr. Thomas's claim is found in Pearle's actions related to FMLA, including establishing a procedure for requesting leave and providing Dr. Thomas with FMLA forms to fill out, suggesting that Pearle intended to grant her FMLA benefits despite her lack of statutory eligibility. Dr. Thomas’s reliance on these actions is deemed reasonable, and Pearle's argument against offering FMLA benefits is regarded as disingenuous.

Although the 1997 SPD is determined to have created an enforceable contract providing Dr. Thomas eligibility for FMLA benefits, Pearle argues that other provisions, specifically the Problem Resolution clause, limit these benefits. Pearle contends that this clause serves as either an exclusive remedy for FMLA violations or necessitates exhaustion of the outlined procedure before any legal action can be taken. Dr. Thomas counters that the Problem Resolution clause is ambiguous, raising questions about whether it is mandatory or permissive and whether it applies to all FMLA claims or only to those involving retaliation or discrimination.

A contract is deemed ambiguous if it can be reasonably interpreted in multiple ways. Disagreement between parties does not automatically imply ambiguity. In assessing Dr. Thomas's interpretations of the Problem Resolution clause, it’s essential to consider that under Illinois law, any ambiguity is resolved against the drafting party, Pearle. The language of the clause is permissive, as it uses "please contact" rather than mandatory language like "you must contact." If Pearle intended for the clause to be mandatory, it could have used clearer language. Although Pearle argues that a permissive interpretation undermines the clause's purpose, it could allow employees an informal resolution option, which may foster goodwill and reduce legal costs for Pearle. Additionally, interpreting the clause as mandatory could conflict with the Family and Medical Leave Act (FMLA), potentially rendering it invalid for FMLA-eligible employees. Given the permissive nature of the clause and the reasonable interpretation thereof, the Problem Resolution clause is ambiguous, indicating a genuine issue of material fact regarding Pearle's intent.

The Problem Resolution clause is argued to be ambiguous in its applicability, particularly regarding whether it mandates that employees, such as Dr. Thomas, must utilize it before pursuing litigation. Dr. Thomas asserts that the clause is relevant only to retaliation claims under the Family and Medical Leave Act (FMLA), citing its language that prohibits discrimination against employees exercising FMLA rights. Pearle dismisses this interpretation as flawed, relegating its rebuttal to a footnote. However, a review of the FMLA reveals two distinct categories of employee protections: prescriptive, which ensures substantive rights, and proscriptive, which prohibits retaliation. The Problem Resolution clause appears to specifically address proscriptive claims of discrimination and retaliation, directing employees alleging such issues to contact the Sr. Vice President, while directing inquiries about substantive FMLA benefits to a benefits coordinator. This interpretation suggests that employees questioning their FMLA rights should seek guidance from the benefits coordinator, whereas those alleging retaliation should approach the Sr. Vice President. Consequently, the ambiguity of the Problem Resolution clause's scope indicates a genuine issue of material fact regarding its applicability to Dr. Thomas's situation.

Dr. Thomas was not adequately informed by Pearle regarding her employment status during her leave, specifically regarding her classification as a highly compensated employee and the potential denial of job restoration. Although Pearle employees indicated there might not be a position available upon her return, they also reassured her multiple times that she had "nothing to worry about" and that a temporary replacement was only filling in for her. Additionally, Pearle provided Dr. Thomas with FMLA forms, which could lead to a reasonable belief that her position was secure and her leave was approved. She only learned of the hiring of a full-time replacement after her leave, which further demonstrates Pearle's lack of clear communication. This ambiguity prevented Dr. Thomas from making an informed choice about her leave. The district court's assertion that the Problem Resolution clause in Pearle's 1997 SPD offered an exclusive remedy for FMLA breaches was incorrect, as the clause lacked explicit language and clarity. Consequently, Dr. Thomas's injury from Pearle's failure to provide clear notice is significant, and the interpretation of the ambiguous contract should be determined by a trier of fact, making summary judgment inappropriate.

The district court's decision is reversed, and the case is remanded for further proceedings. An exemption in the Family and Medical Leave Act (FMLA) allows employers to deny job restoration to highly compensated employees under certain conditions, as outlined in 29 U.S.C. § 2614(b)(1). Employers must provide written notice to employees when they request leave if they intend to deny restoration based on this exemption; failure to do so results in the loss of that right (29 C.F.R. § 825.219). The organization's Problem Resolution clause states that employees cannot be discharged or discriminated against for exercising rights under the FMLA, and outlines a process for addressing grievances with the Sr. Vice President of Human Resources. The eligibility of Pearle employees under the FMLA is not specifically detailed, but it is presumed that employees in major metropolitan areas are eligible if more than 50 employees work within a 75-mile radius. The record indicates that Thomas had interactions with both the regional manager and the human resources manager regarding her leave, although her benefits coordinator is not identified.